8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): May 8, 2018

QUALSTAR CORPORATION

(Exact Name of Registrant as Specified in its Charter)

California (State or other Jurisdiction of Incorporation or Organization) 001-35810 (Commission File Number) 95-3927330 (I.R.S. Employer Identification No.)

130 West Cochran Street, Unit C

Simi Valley, CA 93065

(Address of principal executive offices) (Zip Code)

(805) 583-7744

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communication pursuant to Rule 425 under Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).                                                                                                                        Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Item 2.02. Results of Operations and Financial Condition.

On May 8, 2018, Qualstar Corporation (the “Company”) issued a press release announcing the Company’s financial results for the first quarter ending March 31, 2018. A copy of this press release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.
Exhibit No.	Description
99.1	Press release of Qualstar Corporation dated May 8, 2018. *

* This exhibit is furnished, not filed.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	QUALSTAR CORPORATION
Dated: May 8, 2018	By:	/s/ Steven N. Bronson
		Name: Steven N. Bronson
		Title: President and Chief Executive Officer

EX-99.1

Exhibit 99.1

QUALSTAR REPORTS RESULTS FOR THE FIRST QUARTER OF 2018

Qualstar Reports 20.8% Increase in Revenue and a 500% Increase in Net Income

Simi Valley, CA, May 8, 2018 — Qualstar Corporation (NASDAQ: QBAK), a leading manufacturer of data storage solutions and high-efficiency power supplies, today announced its financial results for the three months ended March 31, 2018.

Quarter Ended March 31, 2018 Financial Results

Revenues for the quarter ended March 31, 2018 were $2.9 million, compared with $2.4 million for the quarter ended March 31, 2017, an increase of $0.5 million or 20.8%. Income from operations for the quarter ended March 31, 2018 was $0.6 million compared with $0.1 million for the quarter ended March 31, 2017, an increase of $0.5 million or 500%. Net income per basic share for the quarter ended March 31, 2018 was $0.29 and $0.03 for the quarter ended March 31, 2017. Net income per diluted share for the quarter ended March 31, 2018 was $0.28 and $0.03 for the quarter ended March 31, 2017.

Data Storage segment revenues were $1.6 million for the quarter ended March 31, 2018, compared with $0.7 million for the same period last year, an increase of $0.9 million or 128.6%, primarily due to the increased product development service revenue received from our partnership with Sony Imaging Products & Solutions for the development of an enterprise class optical disk archive library. Power supply segment revenues were $1.3 million for the quarter, compared with $1.7 million in the quarter ended March 31, 2017, a decrease of $0.4 million, or (23.5)%, due to delayed order deliveries caused by a global electronic component shortage.

Gross margin was 48.3% of revenues or $1.4 million for the quarter ended March 31, 2018, an increase from the gross margin of 37.5% of revenues or $0.9 million for the quarter ended March 31, 2017. Operating expenses for the three months ended March 31, 2018 were $0.8 million or 27.6% of revenues, and $0.8 million, or 33.3% of revenues for the three months ended March 31, 2017.

Steven N. Bronson, Chief Executive Officer and President of Qualstar said, “We are delighted with our solid financial results for the first quarter of 2018. We benefited from an increase in revenues from data hardware sales and product development services, which revenues were partially offset by a decline in power supply revenues caused by component shortages. We expect our product development services revenues and income to vary in future periods based upon the timing of projects and our completion of project milestones. We continue to gain traction in expanding our data storage partners and momentum in the custom power supply space.” Mr. Bronson added, “we continue to pursue new product opportunities and acquisitions.”

Cash, cash equivalents and restricted cash increased $1.5 million for the quarter ended March 31, 2018 to $5.3 million compared to $3.8 million at March 31, 2017.

About Qualstar Corporation

Qualstar, founded in 1984, is a diversified electronics manufacturer specializing in data storage and power supplies. Qualstar is a leading provider of high efficiency and high density power supplies marketed under the N2Power™ brand, and of data storage systems marketed under the Qualstar™ brand. Our N2Power power supply products provide compact and efficient power conversion for a wide variety of industries and applications including, but not limited to, telecom, networking, broadcast, industrial, lighting, gaming and test equipment. Our Qualstar data storage products are used to provide highly scalable and reliable solutions to store and retrieve very large quantities of electronic data. Qualstar’s products are known throughout the world for high quality and Simply Reliable™ designs that provide years of trouble-free service. More information is available at www.qualstar.com or www.n2power.com or by phone at 805-583-7744.

Cautionary Statement Concerning Forward-Looking Statements

Statements used in this press release that relate to future plans, events, financial results, prospects or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements. These forward-looking statements are based upon the current expectations and beliefs of Qualstar's management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Notwithstanding changes that may occur with respect to matters relating to any forward looking statements, Qualstar does not expect to, and disclaims any obligation to, publicly update any forward-looking statements whether as a result of new information, future events or otherwise. Qualstar, however, reserves the right to update such statements or any portion thereof at any time for any reason. In particular, the following factors, among others, could cause actual or future results to differ materially from those suggested by the forward-looking statements: Qualstar’s ability to successfully execute on its strategic plan and meet its long-term financial goals; Qualstar’s ability to successfully implement and recognize cost savings; Qualstar’s ability to develop and commercialize new products; industry and customer adoption and acceptance of Qualstar’s new products; Qualstar’s ability to increase sales of its products; the rescheduling or cancellation of customer orders; unexpected shortages of critical components; unexpected product design or quality problems; adverse changes in market demand for Qualstar’s products; increased competition and pricing pressure on Qualstar’s products; and the risks related to actions of activist shareholders, including the amount of related costs.

For further information on these and other cautionary statements, please refer to the risk factors discussed in Qualstar’s filings with the U.S. Securities and Exchange Commission including, but not limited to, Qualstar’s Annual Report on Form 10-K for the period ending December 31, 2017, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of such Form 10-K, and any subsequently filed reports. All of Qualstar’s filings are available without charge through the SEC’s website (www.sec.gov) or from Qualstar’s website (www.qualstar.com).

Contact Information:

Steven N. Bronson

Chief Executive Officer

Qualstar Corporation

805-617-4419

IR@Qualstar.com

-Financial Tables to Follow-

2

QUALSTAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited) 

  (In thousands, except per share data)

	Three Months Ended March 31,
	2018		2017
Net revenues	$	2,935	$	2,439
Cost of goods sold		1,507		1,549
Gross profit		1,428		890
Operating expenses:
Engineering		121		186
Sales and marketing		295		247
General and administrative		422		399
Total operating expenses		838		832
Income from operations		590		58
Other expenses		-		-
Income before income taxes		590		58
Provision for income taxes		-		-
Net Income	$	590	$	58
Earnings per share:
Basic	$	0.29	$	0.03
Diluted	$	0.28	$	0.03
Shares used in per share calculation:
Basic		2,048		2,042
Diluted		2,101		2,042

3

QUALSTAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	March 31, 2018			December 31, 2017
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	5,231		$	4,698
Restricted cash		100			100
Accounts receivables, net		1,979			1,802
Inventories, net		1,611			1,564
Prepaid expenses and other current assets		173			163
Total current assets		9,094			8,327
Non-current assets:
Property and equipment, net		141			172
Other assets		67			68
Total assets	$	9,302		$	8,567
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	803		$	1,065
Accrued payroll and related liabilities		167			173
Deferred service revenue, short-term		1,234			834
Other accrued liabilities		439			454
Total current liabilities		2,643			2,526
Long-term liabilities:
Other long-term liabilities		52			52
Deferred service revenue		87			93
Total long-term liabilities		139			145
Total liabilities		2,782			2,671
Shareholders’ equity:
Preferred stock, no par value; 5,000,000 shares authorized; no shares issued		-			-
Common stock, no par value; 50,000,000 shares authorized, shares issued and outstanding 2,048,118 at March 31, 2018 and 2,042,019 shares at December 31, 2017		19,514			19,480
Accumulated deficit		(12,994	)		(13,584	)
Total shareholders’ equity		6,520			5,896
Total liabilities and shareholders’ equity	$	9,302		$	8,567

4